Volkswagen to slash non-essential projects

Volkswagen AG will delay or cancel any projects it considers non-essential, Bloomberg reported on Tuesday.

The news comes as the company looks to cut spending following the emissions scandal.

Volkswagen AG’s new chief executive Matthias Mueller said all planned investments will be reviewed.

“What isn’t absolutely vital will be cancelled or delayed,” he told employees. “I will be completely clear - this won’t be painless.”

The embattled company has set aside €6.5bn to pay for the scandal, and may need to fork out more in fines and penalties.

People familiar with the situation told Bloomberg that there is a push from labour movement leaders for VW to reel in R&D spending in a bid to save jobs.But the sources said management want to reduce personnel expenses as well.

The company is also looking at lowering purchasing expenses and reducing sponsorship.

Bloomberg said the size of the cuts will depend on the cost of the scandal.